States forced to cut health coverage / Fiscal crises will make millions uninsured

Robin Toner, Robert Pear, New York Times

Published 4:00 am, Monday, April 28, 2003

2003-04-28 04:00:00 PDT Washington -- Millions of poor Americans face the loss of health insurance or sharp cuts in benefits, like coverage for prescription drugs and dental care, under proposals now moving through state legislatures across the country.

State officials and health policy experts say the cuts will increase the number of uninsured Americans, threaten recent progress in covering children and impose severe strains on hospitals, doctors and nursing homes.

But those officials, confronting a third straight year of fiscal crisis, say they have no choice but to rein in Medicaid, the fast-growing program that provides health insurance for 50 million people.

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Many state officials are pleading for federal help as they face an array of painful trade-offs, often pitting the needs of impoverished elderly people for prescription drugs and long-term care against those of poor families seeking basic health coverage.

The issue is already roiling state legislatures. Almost every state has made or plans cuts in benefits, eligibility or payments to health care providers, according to the National Conference of State Legislatures.

The Center on Budget and Policy Priorities, a liberal research and advocacy group, estimated last month that as many as 1.7 million Americans could lose coverage altogether under proposals advanced by governors or adopted by state legislative committees this year.

Many more who keep their coverage may see it curtailed. Several large states, including California, Florida and Ohio, are considering proposals to eliminate dental and vision coverage for adults. Mississippi and Oklahoma have reduced the number of prescriptions they will pay for. Other states, among them Kentucky and Massachusetts, are moving to tighten eligibility or admissions criteria for long-term care services.

In response to the turmoil in the states, moderate Republicans on Capitol Hill have joined Democrats in seeking legislation that would provide additional federal aid for Medicaid, which is financed by the federal government and the states.

"You can't have cuts of the magnitude the states are undertaking without it ultimately harming health care for some of the most vulnerable low-income citizens in this country," said Sen. Susan Collins, R-Maine, a chief sponsor of the legislation. Another sponsor, Sen. John D. Rockefeller IV, D-W.Va., said, "You don't go down without a fight on this thing."

The Bush administration has opposed such legislation. Administration officials and many House Republicans say Medicaid, created in 1965 as a pillar of the Johnson administration's Great Society agenda, is unsustainable in its current form.

Despite recent efforts to slow its growth, the cost of Medicaid has increased 25 percent in two years and more than 50 percent since 1997, and enrollment is rising at the fastest pace in a decade.

Rather than simply pouring more money into the program, administration officials say they want to revamp it by giving states expanded power to run it.

Short-term financing relief "does not solve the fundamental problem," said Bill Pierce, a spokesman for Health and Human Services Secretary Tommy Thompson. "That's why the secretary put forward the proposal he did. It changes the funding mechanism and gives them greater opportunity to craft benefits that are more flexible benefits."

Critics say the administration proposal is an effort to limit federal responsibility for the program by converting part of it into a block grant.

As Congress returns for a volatile debate over tax cuts and budget priorities, many lawmakers and health care advocates say the strains on Medicaid will loom large. The program, which now costs more than $250 billion a year in federal and state money, is the fundamental health safety net for low-income and disabled Americans.

Medicaid insures one-fifth of all children in the United States and helps pay for two-thirds of all nursing home residents, many of them from middle- class families whose assets have been depleted by nursing home costs, which average more than $50,000 a year.

But Medicaid has ripple effects that touch many more Americans. "Medicaid is, in many ways, a foundation for the health care system," said Dr. Herbert Pardes, president of New York-Presbyterian Hospital.